How To Prevent--And Cure--The Next (Or Any) Recession Or Depression (Updated)

With a recession likely coming later this year or next year at the latest, it is important to realize the causes so such recessions can be cured or even prevented in the first place.  Enter Rodger Malcolm Mitchell, the guru of Monetary Sovereignty, penned this important and timely article.

He notes that every single recession and virtually every depression in history has been preceded by a cut in federal deficit spending, or worse, a federal surplus.  That is not coincidence, since cutting the federal deficit slows the growth of the money supply, and surpluses actually shrink the money supply, all else being equal.  (Federal deficit spending = spending new dollars into existence.)  A growing economy requires a growing supply of money, and when the money supply fails to keep up with the demand for money for too long, the economy reacts by shrinking.  Thus, barring a truly massive increase in private debt (i.e. more money lent into existence by banks), deficit cuts ultimately result in recessions and surpluses result in depressions or at least really long and deep recessions.  And recessions and depressions can only be cured by increasing the money supply dramatically, typically by increasing federal deficit spending.  That's it.

And this makes perfect sense, since GDP is literally nothing more than a money measure.  To wit, GDP = Federal Spending + Nonfederal Spending + Net Exports.  Kinda hard to grow that without sufficiently growing the money supply as well.

Everything else is basically a sideshow, but that said, sometimes sideshows can be significant too.  Take the current Trump Trade War, for example.  This lose-lose, negative-sum game would have been recessionary by now had it not been for the massive growth in the federal deficit occurring at the same time, and eventually it may still cause the next recession in spite of the deficit.  But if the Republicans decide to cut federal spending because of manufactured deficit hysteria, that will cause a far worse recession or depression, on top of the consequences of the trade war.  And Wall Street recklessness can indeed cause financial crises, which of course can have knock-on effects on Main Street as well, as we have seen numerous times already.  Though even that is most likely due to the fact that stock market crashes--or any other asset price crash--will shrink the money supply, all else being equal.  And that is especially true when there is a "credit crunch" where banks suddenly refuse to lend as much as before, as we have seen in the wake of both the 1929 and 2008 stock market crashes (but not 1987).

What about oil and gasoline prices?  True, 10 out of the past 11 recessions have been preceded by sharp increases in fuel prices.  And that makes sense in a country in which oil is the lifeblood of the economy.  But even this is more nuanced than one may think.  Neither increases in interest rates alone nor increases in fuel prices alone seem to be enough to cause a recession by themselves unless such increases are truly extreme, which is very rare.  But the simultaneous combination of significantly large increases in both (that is, a sharp hike in the Fed Funds Rate by more than 2.00-2.50% AND at least a doubling of crude oil prices within a year or two) appears to be sufficient to cause a recession.  Of course, given how rare it is for recessions to not be preceded by cuts in deficit spending, it is not clear if sufficient deficit spending can be enough to prevent an oil-induced recession while interest rates are also hiked to prevent or cure inflation.  But at the very least, increasing federal deficits will cure such recessions once the inflation dragon is defeated.

The Fed recently cut the Fed Funds Rate by 0.25 percentage points (25 basis points), while noting that there would not likely be any more cuts this year.  And the stock market lurched downward upon that announcement, and lurched down again the following day thanks to Trump's further escalation of the trade war, and yet again following China's predictable retaliation.  Cutting interest rates is basically like pushing on a string, and in any case it may be too late to fully prevent the next recession that is largely induced by Trump's trade war.

Overall, we know what causes virtually all recessions and depressions.  That means we also know how to prevent and cure them as well.  That is, when recession hits, or ideally before it hits, we should increase federal deficit spending, or at least refrain from cutting it.  It's really not rocket science.

Enough Is Enough Already! (Yet Again)

Another day, another horrible mass shooting.  This time, it was in fact TWO mass shootings within 24 hours:  one in El Paso, Texas, followed by another in Dayton, Ohio, and so far at least the first one (if not the second as well) appeared to be fueled by racism, xenophobia, and white nationalism (much like the one at the garlic festival in Gilroy, California just days prior).  These two shootings are among the deadliest in this country's history, but in context with the numerous other recent mass shootings it otherwise seems disturbingly banal.  Seems that mass shootings in general have become an almost daily occurrence in recent years, and school shootings in particular an almost weekly occurrence--in the USA at least.  So far there have been 251 mass shootings in 2019 alone.   But the rest of the industrialized world doesn't really seem to have this kind of problem, even in countries where racism, xenophobia, anti-Semitism and hate groups in general are rife.  Why is that?  Well, there's always....

GUNS.

America is the land of 300 million guns, and combined with a culture that is crazier and more violent than most other "developed" countries, and much more extreme inequality, it is a very lethal combination indeed.  And some states, most notably Florida and Texas, but also Pennsylvania as well, have particularly lax gun laws compared to other states.  Of course, the biggest elephant in the room is the fact that at least 98% of mass shooters are MEN.  Thanks to the patriarchy and the sort of "toxic masculinity" that it creates, combined with the above factors, too many men end up resorting to violence.  Like the Iron Maiden song says, "a briefcase, a lunch, and a man on the edge".  With a gun. I mean, what could possibly go wrong, right?

There should be no doubt at this point that something needs to be done.  However, we do not believe that banning all guns for everyone, or adopting British or European-style gun laws, is the solution, as the genie is already out of the bottle, and there is also that whole Constitution thingy as well.  Thus, the TSAP recommends that the following measures be taken:

1. Bring back a new and improved 1994 assault-weapons ban yesterday, this time with more teeth.  This time, include all rapid-fire devices and all magazines with more than ten rounds in the ban as well as the previously-banned types of semi-automatic rifles and their knockoffs.
2. Remove the 20-year ban on gun violence research, yesterday. 
3. End the gun-show loophole and implement universal background checks, yesterday.
4. Put a significant excise tax on all bullets/ammo, like Chris Rock recommended. (Seriously)
5. Treat ammo sales the same as gun sales.  Or better yet, treat bullets like Sudafed:  must show ID, limit on the number that one can buy, the number bought would be recorded, and if you do buy too many, you will be investigated.
6. Pass a "one gun a month" law at the federal level.  And consider perhaps putting a limit on the number of guns that an individual can own at a given time, except for antiques/relics/curios.
7. Require reporting of lost or stolen guns.
8. Regulate firearms like other consumer products in terms of health and safety standards--currently such standards are nonexistent.
9. Improve enforcement of existing gun laws, which tend not to be enforced very well these days, and improve state reporting of prohibited persons to NICS.  Also, prohibit anyone on the terrorism watch list from buying any guns, period--and consider hate groups to be domestic terrorists as well.
10. Consider a massive gun buyback program, one that pays significantly more than what the guns are worth on the street.  Voluntary for any still-legal weapons, mandatory for any newly-banned ones. 
11. And last but not least, improve our woefully-inadequate mental healthcare system.

Of course, to truly solve our gun violence problem would require a fundamental overhaul and transformation of our society, which the TSAP clearly supports.  We need to go from being what Riane Eisler calls a "dominator" society to more of a "partnership" society, as the latter kind is far less violent overall.   But in the meantime, the aforementioned recommendations would go a long way towards taking the dangerous edge off of the problem. 

And like other cases of domestic terrorism, these were most likely due to a combination of toxic masculinity, easy access to deadly weapons (especially the obligatory semi-automatic AR-15, AK-47, or their knockoffs), and a virulent racism and xenophobia fueled by the so-called "alt-right" (read: white supremacists, KKK, and neo-Nazis) as well as the Trump administration that nods, winks, and looks the other way (when they aren't stoking the fire themselves like Trump himself apparently had done recently).  Regardless of the motive, the first two factors are absolutely essential for virtually all mass shootings.   To be clear, these atrocities are, even more disturbingly, NOT isolated incidents or flukes, but the tip of a very large iceberg of hate and violence that appears to be getting worse in recent years.

I don't know about you, but my favorite part of the Second Amendment is where it says "well-regulated". Too bad so many Republican Congresscritters who are bought and paid for by the NRA can't seem to read the first half of the freaking sentence.  Oh, and nevermind that when it was written, guns at that time fired at most one round per minute, not 600+ per minute like so many of today's killing machines.  Not like the gun lobby and their lackeys really do nuance.

It's (Still) Mueller Time!

The Russiagate scandal, along with Trump's other myriad scandals, is not going away anytime soon.  And after Mueller testified to Congress, he made it clear that Trump was NOT exonerated, particularly for the high crime of obstruction of justice, though under current Justice Deparment rules a sitting president cannot be indicted.  Thus, Congress needs to impeach him.  And Nancy Pelosi really needs to stop dithering about it and get the ball rolling yesterday.

We Still Condemn Trump's Deplorable Immigration Policy

Trump's deplorable immigration policy is only getting worse it seems.  While the administration has supposedly stopped separating undocumented children from their parents at the border, the children thay have been separated already have still not been reunited.  And as there is currently a crisis at the border with all of the recent asylum seekers, they are increasingly being detained in deplorable conditions without adequate food, water, and sanitation.   We literally have innocent children being treated worse than convicted felons in this country.

And yes, "concentration camps" is the correct term, since the dictionary definition is "the mass detention of civilans without trial".   So it looks like AOC is apparently spot-on.  This is how it started in 1930s Germany, after all--first they had detention camps, then slave-labor camps, and only from 1941 onward did they have extermination (death) camps.

Look, it is clear that a lot of people don't like the term "concentration camps".  Maybe we should call them "torture camps" instead, given that what all too often occurs in them meets the internationally recognized definition of torture, especially when it involves children.  Or perhaps we should call them "Trump Camps" to guarantee that historians forever attach their memory to his name and vile and disgusting legacy, while ironically giving him a perverse ego boost without him even seeing the irony.

Meanwhile, the Trump administration is planning even more ICE raids for the purpose of deporting more and more undocumented immigrants, including those who have been living here for years or decades and have no criminal records.

Clearly, such cruelty for cruelty's sake has NOT been any sort of deterrent, as the number of illegal border crossings has gone from the lowest it has been in years in much of 2017 to the highest it has been in decades by March 2019.  Let that sink in.

That kinda backfired, didn't it?  Meanwhile, the 100% preventable illnesses, injuries, and deaths of both children and adults in these camps just keep piling up every day that goes by.  We can no longer call our country a "shining city on a hill" anymore as long as this continues.  Even the late Ronald Reagan (who coined both that phrase, as well as the MAGA slogan, by the way) must be spinning in his grave right now.

To be sure, the crisis at the border does not have any easy, ready-made solutions at this point, and certainly requires thinking outside the box.  Ideally, all immigrants should come in through the proper channels legally.  But the system is currently broken, and when those proper channels are blocked off by the powers that be, for political reasons, clearly something has to give as a result.  And the train has basically left the station at this point.

Don't look away.  This is how it starts, people.  The banality of evil, and "we were just following orders" and "the law is the law".  So where's the long-overdue outrage?  Remember, the only thing it takes for evil to prosper, is for good people to do nothing.  Seriously.

No War With Iran!

After the recent attacks on oil tankers in the Sea of Oman and Strait of Hormuz by an unknown attacker, Trump and his warmongering cronies are now hastily blaming Iran for these attacks.  But there is plenty of reason to believe they are being, shall we say, "economical with the truth".

The timing alone is suspicious, as Trump has every reason to "wag the dog" to deflect from his ever-mounting scandals including, but not limited to, Russiagate.  Also, the evidence is lacking and what little there is, just doesn't really seem to add up.  And we know that Trump has been hell-bent on provoking Iran ever since pulling out of the nuclear deal last year.  Time will tell, of course, but this really has "false flag" written all over it.

Besides, going to war with Iran would most likely be a disaster of epic proportions, and certainly not something to take lightly.   And even if Iran does somehow turn out to be the culprit, the fact remains that the ships attacked were not even American tankers (they were Norwegian and Japanese), and fully zero Americans were harmed in the process.  In fact, this was apparently a "property damage only" (PDO) incident.  So let's NOT fall for this would-be modern-day Gulf of Tonkin incident and get sucked into yet another decades-long quagmire again.

The best foreign policy can be summed up in four words:  "first, do no harm".  Seriously, this is not a game, and the stakes have never been higher now.

UPDATE:  Just a few days later on June 20, Iran confirmed that they shot down an unmanned American spy drone (again, PDO) that they claim was flying in their airspace, while the Trump administration claims it was over international waters.  Time will tell who is telling the truth, perhaps even both if, for example, it turns out that the drone entered Iranian airspace first but was subsequently shot down over international waters.  Maritime borders can be tricky and nuanced.  Regardless, this is still not a good reason to go to war with Iran.

It is exceeding unlikely that the Orange Cheeto in Chief actually wants a shooting war with Iran.  He himself has said as much.  He would rather just bluff to make himself look tough while distracting from his myriad scandals closing in on him in the late stage of his failed presidency.   And his puppetmaster Putin apparently doesn't want him to go to war with his buddy Iran, either.  But now that Iran apparently called his bluff, and Bolton and Pompeo are still itching for war, the United States is now in a very precarious situation thanks to Trump's stupid bear-poking saber-rattling routines, and a war may still happen inadvertently in spite of him canceling it at the last minute.  He is clearly like a crackhead playing with matches and gasoline, and every day he seems more and more unfit for the office of dogcatcher, let alone for the office of the Presidency.

Take Back The Flag

Just pointing out that today is Flag Day.  But this blog looks no different today because we display the Stars and Stripes every day (albeit inverted ever since Trump took office, as our nation is in distress).

To all the ignorant fools who burn it, remember what it is that you're really burning, and all those that fought and died for it. Those who consider themselves to be on the political left would be better served by "taking back the Flag" and waving it proudly, so it is not perverted into an ultra-right-wing symbol by the fascists. Make it clear that the government policies you oppose are not in the national interest. And let everyone know that you can just as strongly love this country as you fear its government.  In fact, plenty of true patriots often do feel that way, and as Jefferson once said, "dissent is the highest form of patriotism."

The Flag is not Republican, Democrat, liberal, conservative, or belonging to any other faction. It is the American Flag, and it belongs to all of us.  Live free or die!

How To Prevent--And Cure--The Next (Or Any) Recession Or Depression

With a recession likely coming later this year or next year at the latest, it is important to realize the causes so such recessions can be cured or even prevented in the first place.  Enter Rodger Malcolm Mitchell, the guru of Monetary Sovereignty, penned this important and timely article.

He notes that every single recession and virtually every depression in history has been preceded by a cut in federal deficit spending, or worse, a federal surplus.  That is not coincidence, since cutting the federal deficit slows the growth of the money supply, and surpluses actually shrink the money supply, all else being equal.  (Federal deficit spending = spending new dollars into existence.)  A growing economy requires a growing supply of money, and when the money supply fails to keep up with the demand for money for too long, the economy reacts by shrinking.  Thus, barring a truly massive increase in private debt (i.e. more money lent into existence by banks) deficit cuts ultimately result in recessions and surpluses result in depressions or at least really long and deep recessions.  And recessions and depressions can only be cured by increasing the money supply dramatically, typically by increasing federal deficit spending.  That's it.

And this makes perfect sense, since GDP is literally nothing more than a money measure.  To wit, GDP = Federal Spending + Nonfederal Spending + Net Exports.  Kinda hard to grow that without sufficently growing the money supply as well.

Everything else is basically a sideshow, but that said, sometimes sideshows can be significant too.  Take the current Trump Trade War, for example.  This lose-lose, negative-sum game would have been recessionary by now had it not been for the massive growth in the federal deficit occurring at the same time, and eventually it may still cause the next recession in spite of the deficit.  But if the Republicans decide to cut federal spending because of manufactured deficit hysteria, that will cause a far worse recession or depression, on top of the consequences of the trade war.  And Wall Street recklessness can indeed cause financial crises, which of course can have knock-on effects on Main Street as well, as we have seen numerous times already.  Though even that is most likely due to the fact that stock market crashes--or any other asset price crash--will shrink the money supply, all else being equal.  And that is especially true when there is a "credit crunch" where banks suddenly refuse to lend as much as before, as we have seen in the wake of both the 1929 and 2008 stock market crashes (but not 1987).

What about oil and gasoline prices?  True, 10 out of the past 11 recessions have been preceded by sharp increases in fuel prices.  And that makes sense in a country in which oil is the lifeblood of the economy.  But even this is more nuanced than one may think.  Neither increases in interest rates alone nor increases in fuel prices alone seem to be enough to cause a recession by themselves unless such increases are truly extreme, which is very rare.  But the simultaneous combination of significantly large increases in both (that is, a sharp hike in the Fed Funds Rate by more than 2.00-2.50% AND at least a doubling of crude oil prices within a year or two) appears to be sufficient to cause a recession.  Of course, given how rare it is for recessions to not be preceded by cuts in deficit spending, it is not clear if sufficient deficit spending can be enough to prevent an oil-induced recession while interest rates are also hiked to prevent or cure inflation.  But at the very least, increasing federal deficits will cure such recessions once the inflation dragon is defeated.

Overall, we know what causes virtually all recessions and depressions.  That means we also know how to prevent and cure them as well.  That is, when recession hits, or ideally before it hits, we should increase federal deficit spending, or at least refrain from cutting it.  It's really not rocket science.

The Best Way To Honor Our Fallen Heroes

This Memorial Day, and any other day of the year for that matter, the best way to honor our fallen heroes is to stop making more of them, as blogger Dave Hitt famously noted.  We need to bring our troops home and stop sending more and more of our servicemembers to these unnecessary wars of choice.  And of course, our Veterans need to be properly cared for as well, something that, with few exceptions, both corporate duopoly parties in government have consistently failed to do for decades now.

Let us now take a moment of silence for our fallen heroes who have made the ultimate sacrifice for our country.

What The (Latest) Right-Wing Attack On Women's Reproductive Rights Is Really About (Hint: It's NOT The Sanctity Of Life)

In recent weeks, the long-standing right-wing assault on women's reproductive rights has heated up dramatically.  Now that there are enough right-wing reactionary judges on the Supreme Court to seriously endanger Roe v. Wade, several states have passed increasingly restrictive abortion laws.  It did not stop with the TRAP laws, bizarre restrictions, and attempts to defund Planned Parenthood years ago.  And it will NOT stop with the latest "heartbeat" laws in Missouri, Ohio, and Georgia, or with Alabama's near-absolute BAN on abortion either.  And if unchecked, it will NOT stop with overturning Roe v. Wade (and Doe v. Bolton) either, since after that, Griswold v. Connecticut and Eisenstadt v. Baird (the cases that legalized birth control) is ultimately in their sights as well.

Now you see why they were in such a rush to get Brett Kavanaugh confirmed despite the cloud of sexual assault (including attempted rape) allegations hanging over his head.  But why the recent push to ultimately eradicate women's reproductive rights NOW?  Why has it become so feverish, more so than usual?  It is no coincidence that Alabama's draconian abortion ban was signed into law on the same day that it was announced that the birth rate, particularly the total fertility rate (TFR), had apparently dropped to a new low for the USA:  1.728 children per woman. Granted it is not the only reason, but the panic among both the religulous reich as well as the corporate oligarchy is certainly palpable, since capitalism depends on growth for the sake of growth, the ideology of the cancer cell that eventually kills its host, by the way.  It's basically one giant Ponzi scheme, with patriarchy as its main protection racket.

What we are witnessing is a sort of "birth strike" by American women, and even men as well, particularly of the Millennial generation.   Given the outrageous cost of living these days, and especially the cost of raising even one child (let alone two or more), lack of social support for parents and a fraying social safety net in general, stagnant wages, a hollowed-out middle class, and the massive albatross of student loan debt, it actually makes perfect sense.  They are the ones who are actually thinking rationally here.

And contrary to what the naysayers may claim, that is actually a very GOOD thing on balance.  The world is grossly overpopulated and in serious ecological overshoot, and Americans' truly elephantine ecological footprint per capita due to our massive pollution and overconsumption of resources only makes it that much more important to reduce birthrates in the USA relative to the rest of the world.  And such grave ecological concerns greatly dwarf any social and economic concerns about population aging and other consequences of low birthrates.  Especially since with a Monetarily Sovereign government like our own federal government, money is literally no object when it comes to things like Social Security, Medicare, Medicaid, and things like that--the government can literally only go broke if they choose to.  And our addiction to economic growth is also part of the problem in terms of ecological sustainability, so that fear needs to be jettisoned at once as well.

In fact, one recent study finds the ideal TFR in terms of standards of living overall is in fact in the 1.5-2.0 range, basically the same as what the TSAP has long advocated since our founding nearly a decade ago in 2009.  Yes, really.  Take that, birth dearthers!

Of course, it is not all wine and roses either.  The very same New York Times article that we referenced in a previous post does note that both women and men are on average having fewer kids than their own self-reported ideal numbers, primarly due to economic reasons.  Part of the decline in fertility is due to Millennial women having more choices than previous generations, of course, but at the same time those choices are severely constrained by economics.  Our nation has a truly abysmal record of providing paid family leave, high-quality childcare, and social safety net benefits in general compared to most other modern and even semi-modern countries.  And in spite of increasing gender equality in many ways, the modern workplace remains both largely male-dominated and male-defined, and thus stuck in the past in terms of work-life balance.  And while the perennial fears of low birthrates are largely overblown, it is still entirely possible that if they eventually fall to extremely low levels (such as Japan's 1.2-1.4 over the past two decades) and remain that low for decades at a time, we may very well hit a "pothole" on the road to sustainability.  So there is still plenty of room for improvement in that regard, even if current TFRs are right where they should be.  And besides, it is simply the right thing to do regardless of fertility rates and any concerns about such numbers.

If the pro-lifers and pro-natalists really cared, they would instantly advocate not only very generous paid family leave and subsidized (if not free), high-quality childcare, but would also support things like Universal Basic Income (UBI) to eliminate poverty (especially child poverty) while also (partially) compensating the unpaid work of mothers (and some fathers as well).  They would also advocate better quality education from pre-K through post-grad, also free, as opposed to currently trying to kill the entire public education system via death by a thousand cuts.  They would advocate better work-life balance for both women AND men, higher minimum wages, and especially shortening the workweek (what's the point of having kids if you are never going to see them?).  And they would also advocate single-payer Medicare For All.  But do you see them advocating any of those things?  Of course not.  Gee, I wonder why.

So can you really blame young people for effectively going on a (partial) reproductive strike given the world we currently live in?  Of course not.

The best way to sum things up:  Want us Millennials to have (more) kids?  Give us a quarter-million dollars, then we'll talk.  Because that's about how much it costs on average to raise a child from birth through age 18--and that doesn't even include college.  And besides, our Mother Earth will truly thank us in the long run.  Otherwise, silence is golden.  Capisce?

The Mueller Report Is Out--And Even The Redacted Version Is A Lot More Damning Than Trump Wants You To Believe

Well, the much anticipated Mueller Report is out now, and even the redacted version is a LOT more damning than Trump or Barr want anyone to believe.  Seriously.  While it is ostensibly inconclusive about Trump's personal participation in the Russian hacking and interference, the three most important words in the entire 400+ page report are "does NOT exonerate", particularly in relation to the high crime of obstruction of justice. And even the inconclusiveness was largely due 1) important evidence apparently being deleted/destroyed by some of the major players in the Russiagate scandal, and 2) apparent duress, however subtle, to one degree or another, from the Justice Department under Trump.

I mean, this is the very same Donald Trump who unceremoniously fired FBI Director James Comey, then forced Attorney General Jeff Sessions to resign, and even tried to fire Robert Mueller himself--all because he wanted the ever-growing Russiagate investigation to just go away already.  Ipse dixit--he himself said it, after all.  If that is not a textbook example of obstruction of justice, and one that would make even Tricky Dick Nixon himself blush, in fact, I really don't know what is anymore.

And that is just the redacted version!  In other words, Trump is NOT out of the woods yet, if ever.  His fate now rests in the hands of Congress, as well as the Southern District of New York, who is now led by Attorney General Letitia James.  So Donald, if I were you, I would do us all a YUUUGE favor and RESIGN, yesterday.  Then pray that you don't ultimately end up behind bars, because I doubt they would take very kindly to the likes of you in the big house.

Here's A Novel Idea: Just Abolish It Already!

Now that a federal judge recently struck down as unconstitutional the longstanding requirement that only men, and not women, have to register for Selective Service (aka the draft), its legal status is in limbo until the Supreme Court sorts it out.  Some believe that the best solution is to expand it to include women, and that does indeed make sense from a gender equality perspective.  But here is an even better solution:  just abolish it already, period.

The United States has not had an active draft since it was officially abolished in 1973, at the end of the Vietnam War, and for good reason:  it no longer made any sense.  Following that, the requirement to register for Selective Service was subsequently ended in 1975, pushing the Selective Service System into "deep standby", which was essentially complete hibernation.  After all, it makes no sense to have registration if there is no active draft or chance for one in the near future, right?  Such hibernation lasted until 1980, when President Carter reactivated the registration requirement--but not the draft itself--in order to, in his own words, "send a signal to the Russians" since the Cold War looked like it was (briefly) heating up a bit once again.  Fair enough.

But here we are now in 2019, and the largely symbolic registration requirement still remains in effect, and for what, exactly?  It is basically an antiquated relic from a time when given the technology (or lack thereof) of the day, it may have been perhaps a bit more difficult to quickly reactivate a draft even if truly necessary.  But even in 1980, and with relatively puny enforcement, the registration system was back up and running within a matter of months despite being idle for five years.  And today if they really wanted to, even without registration, the government could literally find anyone they wanted to draft from all of the many other databases that already exist.  That method may have a bit more friction to it, of course, but a little bit of friction for something with that much gravitas is really not a bad thing.

And the odds of an active draft ever being reinstated in the foreseeable future are almost nil given today's technology and the increasingly professional nature of the US Armed Forces.  Even if we run very short of troops, we can simply pay them more and we will be thus able to meet our recruiting goals.  And if we still can't meet our goals, we should really question the wisdom of whatever war(s) we happen to be fighting at that time, and exactly whose interests are really being served.  To put it bluntly, a country that needs a draft to defend itself deserves to lose, and in a truly just war, conscription would be unnecessary since volunteers would surely be plentiful.

(Some would note exceptions, of course, but those very rare exceptions only prove the rule.)

Therefore, the TSAP believes that registration requirement be abolished at once and the Selective Service System be put back into the hibernation of "deep standby" just like it was in 1975-1980.  And if they like, they can also update the law currently on the books to include women in the event it is ever reactivated in the future.  But make no mistake, the TSAP has never, and will never, support a draft--unless of course you mean the "consensual conscription" idea that we have floated before in which all wars longer than 90 days are put up to a popular vote, and only "yes" voters (and perhaps followed by abstainers) would get drafted.  That's about as fair as it gets.  Otherwise, we unequivocally say, as they famously said back in the day:

"HELL NO, WE WON'T GO!"

and, as the late Major General Smedley Butler famously said,

"TO HELL WITH WAR!"

Ruh Roh. The Yield Curve Just Inverted

Yesterday, on March 22, 2019, the yield curve inverted for the first time since 2007.  Specifically, the spread between the 3-month Treasury and the 10-year Treasury has flattened and then flipped:  short-term yields are now higher than long-term yields, the reverse of what is normally the case.  It is a leading indicator of a coming recession, since it basically means that investors are becoming so bearish that they would rather lock in current interest rates as they expect rates to drop significantly in the near future rather than continue rising further.  And since it typically precedes the onset of a recession by 6 to 18 months on average, it means that the odds of a 2019 or 2020 recession are looking very, very likely.

And while the stock market seemed to be rebounding from the December mini-crash of 2018, it now seems to be once again teetering on the edge of the Big One, the coming Crash of 2019.  And with Trump's tariffs and resulting trade war really starting to bite hard recently, leading to GM and Ford both announcing layoffs, and American soybean farmers getting creamed, things really don't look so hot right now.

In Bernie we TRUST, in Trump we RUST.  Tired of "winning" yet?  Hey, American Brexit, now do you finally Regrexit?

What MMT Gets Wrong, And Monetary Sovereignty Gets Right (Part Deux)

Recently, we wrote an article discussing the theoretical and practical differences between Modern Monetary Theory (MMT) and Monetary Sovereignty (MS).  But still, some may wonder why there is essentially no correlation between deficit spending and inflation, at least not in the post-gold standard era and not even during WWII.

Surely there must be some connection, right?  Well, there technically is, but essentially only at the extremes.  Why?  Because of the "velocity of money", spending (sources of dollars) need NOT be symmetrical with taxes (sinks of excess dollars), only that enough dollars are clawed back in the long run (with the definiton of "enough" being quite elastic).  And as the velocity of money increases along with actual or potential inflation, so too does the tax take, narrowing the gap between sources and sinks.

For example, if the velocity of money factor is 7 (i.e. newly created dollars changing hands seven times on average, before being destroyed), spending can theoretically exceed tax revenues at any given time by up to a whopping factor of seven (!) before the excesses begin to accumulate year after year to the point where inflation increases when demand for goods and services grows much faster than supply, all else being equal.  Of course, the velocity will vary, and all else may not be equal, but that only makes it even more of an automatic stabilizer overall.

(Of course, it sure didn't hurt that during WWII, taxes were collected in real time (i.e. withholding) and the tax base was greatly broadened as well, despite record-high yawning deficits.)

And of course, another major sink is the FERAL Reserve draining excess bank reserves, while raising interest rates increases the demand for dollars and thus the relative value of dollars.  And paying down debts of any kind is another major sink as well.  And of course, a growing economy requires a growing supply of money, just to prevent recession and/or deflation, so the sources can still exceed sinks of all kinds by quite a large margin before inflation begins to bite, and we are currently nowhere near that point.

And of course, banks create money out of "thin air" all the time every time they make loans.  The difference is they don't create the interest that is owed, which must come from somewhere when it is paid back.  And if this were the only method of money creation (which it would be, if federal "deficit" spending money into existence interest-free were zero or negative, that is, a so-called "balanced budget" or "surplus"), then there would NEVER be enough money to pay it back, leading to net destruction and artificial scarcity of money.  And that would be VERY harmful for any economy--it was, after all what turned the mild-at-first 1929 recession into the full-blown Great Depression by the time 1930 had come and gone.

So it's no wonder we don't see any robust correlation between deficit spending  (i.e. money creation) and inflation in either the short or long run.  Thus, another myth bites the dust.

We Wholeheartedly Condemn The New Zealand Shooting

"On March 15, 2019, a horrific racist, xenophobic, and Islamophobic hate crime and act of terrorism shook New Zealand as well as the world.  A white supremacist hatemongering terrorist launched a deadly attack on two mosques in Christchurch, New Zealand, killing 49 people and injuring countless others, including children, who were worshipping in those mosques.  Horrible as this unprecedentedly deadly mass shooting was, it would likely have been far worse still had the terrorist been able to set off his many bombs as well.  And we wholeheartedly condemn this horrific and cowardly act of hate and terrorism, and all other such acts as well as the virulent ideologies, including white nationalism, racism, xenophobia, and Islamophobia, that inspire and lead to such senseless violence."

This was literally all that Trump and his sycophantic lackeys would need to have said to avoid being unnecessarily tainted (as much) by having somehow inspired such horrific and hateful violence with his own virulently hateful rhetoric against (non-white) immigrants, refugees, and especially Muslims.  (Which, by the way, his rhetoric apparently DID inspire in part, according to the killer's own rambling manifesto.)  But apparently the Donald can't even do that, preferring instead to just punt on the issue altogether and give the usual pat answers.  And that, ladies and gentlemen is, in a word, "Sad!".

What MMT Gets Wrong, and Monetary Sovereignty Gets Right

Modern Monetary Theory, or MMT, is just starting to break into the edges of the mainstream now.  Progressives from the new rising star Alexandria Ocasio-Cortez to the venerable Bernie Sanders are now (correctly) starting to endorse, whether subtly or not-so-subtly, the core tenet of MMT, namely, that federal deficits don't really matter since the federal government can just print the money.  While few are bold enough to say out loud the corollary that federal taxes do not actually pay for federal spending (and that the "national debt" is literally nothing more than deposits in Treasury security accounts), it is nonetheless implied since it follows logically from the premise that the federal government has infinite money.  And Rodger Malcolm Mitchell's related offshoot theory, Monetary Sovereignty (MS), also contains these same truths as well.

But MMT is also seriously flawed in a way that MS is not, and that is how they deal with the inflation question.  MMT prefers to keep interest rates permanently at zero or close to zero, regardless of how much inflation there is, preferring instead to adjust tax rates in response to inflation.  MS, on the other hand, prefers to use interest rates as a way to prevent and cure inflation, as taxes are too crude, too political, and not quick enough to use for inflation control as it happens.  (Note that even modest federal taxes can still work for automatic inflation control in the background without changing the tax rates, as the tax take automatically increases with the velocity of money.)  MMT, in other words, paints itself into a corner, while MS retains the flexibility to deal with inflation as it happens.  Of course, raising interest rates only works to fight demand-pull inflation as opposed to cost-push inflation, but the former is much more sailent than the latter in regards to the (generally overblown) fear of "what if we print too much money?"  The FERAL Reserve can also drain excess bank reserves (i.e. where all excess liquidity eventually shows up sooner or later) and "sterilize" them, as yet another means of inflation control.

In other words, following MMT to the letter will ultimately take us back to where we started at square one in the same box, while MS represents a genuine way out of the box without the pitfalls of MMT.

Thus, while it is probably good to keep interest rates low or even zero as a rule, the flexibility to raise them as needed still needs to remain on the table.  And some sort of federal taxation would need to remain even if not for revenue-raising purposes.  Aside from a crude but automatic background method of inflation prevention, taxes can also give We the People leverage over the oligarchs by providing a handy "carrot and stick" means of controlling the economy to one degree or another.  So let's not box ourselves in with too pure a version of MMT, or throw out the proverbial baby with the bathwater.

Otherwise we will find ourselves, to quote Paul Krugman, "Running on MMT".

We Have A National Emergency, All Right--And It's Trump

Trump just made himself even more of a man without a country, if that's possible, by declaring a "national emergency" to try to force his stupid border wall to be built.  This is almost certain to be challenged and defeated in court.  Meanwhile, he clearly caved to the Democrats otherwise, yet again.  Thus, his "national emergency" is a sign of desperation and weakness, not strength.  Keep digging your own grave, Donald....

Oh, and by the way--this is literally the kind of stuff that DICTATORS do, NOT Presidents.  Abusing your power by usurping Congress' rightful "power of the purse" just because you don't get your way is absolutely NOT NORMAL in any democracy, especially when the so-called "national emergency" at the southern border is contrived and manufactured from on high by none other than the White House.

And if your are looking for the money to pay for that wall, perhaps the first place you should look is the missing $21 TRILLION (more than the entire US GDP, and until very recently, more than the entire gross National Debt) that the Pentagon somehow "lost" and can't seem to find or even account for.  To minimize it as just an "accounting error" is, albeit ironically, SO CLOSE to actually getting the point of Monetary Sovereignty.  Which is to say you could, you know, "just print the money", in your own words, Donald.  (And yes, he actually said that in reference to the National Debt in 2016.)  Trillion-dollar coins, anyone?

We never thought we would agree for once with the vile Ann Coulter, but apparently even a stopped clock is right twice a day:  "The only national emergency is that our president is an idiot".  Truer words have never been spoken.

State Of The Planet Address 2019

Today, Trump gives the State of the Union Address (spoiler alert:  it sucks.)  And the TSAP is giving our annual State of the Planet Address.  Yes, we know it is a bit of a downer to say the least.  So sit down, take off your rose-colored glasses, and read on:

Our planet is in grave danger, and has been for quite some time now.  We face several serious long term problems:  climate change, deforestation, desertification, loss of biodiversity, overharvesting, energy crises, and of course pollution of many kinds.  Polar ice caps are melting.  Rainforests have been shrinking by 50 acres per minute.  Numerous species are going extinct every year.  Soil is eroding rapidly.  Food shortages have occurred in several countries in recent years.  Weather has been getting crazier each year thanks to climate change.  We have had numerous and often record-breaking wildfires, floods followed by long periods of drought, and a "storm of the century" at least once a year for the past several years.   And it is only getting worse every year.  In fact, 2016 has been the hottest year on record, and 2017 was the hottest year without an El Nino.  Look no further than the three record-breaking storms in the past 15 years:  Katrina (2005, highest storm surge), Sandy (2012, largest diameter), and now Harvey (2017, a 1000-year flood, and overall worst hurricane on record), followed by Irma and Maria which devastated Puerto Rico, for a taste of the not-too-distant future.  And that was before Hurricane Michael devastated a rather large chunk of Florida recently.

In fact, on the other side of the world, just a little over a year ago, the worst monsoon season in recent memory has recently displaced 41 million people due to record flooding.  Thus for many, the future is sadly already here to one degree or another.

None of this is an accident of course.  These problems are man-made, and their solutions must also begin and end with humans.  We cannot afford to sit idly by any longer, lest we face hell and high water in the not-too-distant future.  Our unsustainable scorched-earth policy towards the planet has to end.  Yesterday.

While we do not invoke the precautionary principle for all issues, we unequivocally do for the issue of climate change and any other environmental issues of comparable magnitude.  In fact, for something as dire as climate change, as of 2015 we now support a strong "no regrets" approach.  With no apologies to hardcore libertarians or paleoconservatives, in fact. We are not fazed one bit by the naysayers' pseudoscience as it does not really "debunk" the scientific consensus on anthropogenic global warming. The only serious debate is about how fast it will happen, and when the tipping point (or points) will occur. It is not a matter of if, but when. And the less precarious position is to assume it is a real and urgent problem. We need to reduce CO2 emissions to the point where the CO2 concentration is at or below 350 ppm, ASAP.  And it is currently at an unsustainably high level of 400+ ppm, and growing rapidly every year.

Given the latest IPCC report, which is truly nothing short of horrifying, the general consensus among climate scientists is that we have only at most 12 years left (now more like 11) to act radically before truly catastrophic climate change is a foregone conclusion.   And 2030 will be here before we know it.  

Now THAT is a national emergency!  And a global one, in fact.  Thus, a full-steam-ahead, Green New Deal 2.0 is LONG overdue.

Solving the problem of climate change will also help to solve the other ecological crises we are facing, for they all ultimately have the same root causes, not least of which is our insatiable addiction to dirty energy.  However, there is a right way to solve it, and several wrong ways.  Technology is important, but it won't be decisive on its own (economics geeks may recall Jevons Paradox).  The real problem is the paradigm that our society has been following, and that system is based on wetiko, the parasite of the mind and cancer of the soul.  It often seems that the only difference between capitalism and cannibalism is the spelling.

The TSAP endorses the ideas embodied in Steve Stoft's new book Carbonomics, most notably a tax-and-dividend system that would tax carbon (i.e. fossil fuels) at the source, and give all Americans an equal share of the revenue generated from this tax.  (Note that our proposal to tax natural resources and pay out an Alaska-like citizen's dividend already includes this.)  Yes, prices for various things would undoubtedly rise due to this tax, all else being equal, but the dividend will allow Americans to pay for this increase. The average American would in fact break even, but those who (directly or indirectly) use less energy than average will effectively pay less tax, while the energy hogs will effectively be taxed more, as they should be. Thus it is certainly not a regressive tax, and may even be mildly progressive. This is both the simplest and most equitable way to reduce carbon emissions as well as other forms of pollution, not to mention waste of dwindling non-renewable resources. The real challenge is getting the feds to accept something that won't directly benefit them (in the short term).  Carbonomics also includes other good ideas, such as improving how fuel economy standards are done, and crafting a better verison of the Kyoto treaty.   

In addition to the ideas in Carbonomics, we also support several other measures to help us end our addiction to fossil fuels once and for all.  Our Great American Phase-Out plan would phase out all fossil fuels by 2030 at the latest, via alternative energy, efficiency, and conservation.  One good idea to further the development of alternative energy would be the use of feed-in tariffs for renewable power sources. 

Of course, it is not enough to stop emitting carbon dioxide, we also need to remove the current excess levels of it from the atmosphere as well, as that stuff can otherwise linger for centuries and continue wreaking havoc on the climate.  We support ending net deforestation completely, and putting carbon back in the ground through carbon sequestration. One method is known as biochar, a type of charcoal made from plants that remove carbon dioxide from the air, that is subsequently buried. This is also an ancient method of soil fertilization and conservation, originally called terra preta.  It also helps preserve biodiversity.  Another crucial method would be regenerative organic farming, which also turns the soil into an effective carbon sink as well.  And we will most likely also need to employ higher-tech methods of sucking carbon out of the air as well.

We've said this before, and we'll say it again.  Our ultimate goal is 100% renewable energy by 2030, but we need to hedge our bets.  We can phase out fossil fuels, or we can phase out nuclear power, but we can't do both at the same time--and fossil fuels need to be phased out first, and quickly.  Nuclear is doing a pretty good job of phasing itself out as it is.  So let's not get rid of it prematurely.  

But the biggest elephant in the room (make that the elephant in the Volkswagen) is overpopulation.  It does not make for pleasant dinner conversation, but it must be addressed or else all other causes become lost causes in the long run. We absolutely need to have fewer kids, or nature will reduce our population for us, and the latter will NOT be pleasant to say the least. The TSAP believes in voluntarily reducing the total fertility rate (TFR) to 1.5-1.9 children per woman to do so, but let us be clear that we do NOT support draconian and/or coercive measures of population control (like China has used).  We believe that more liberty is the answer, not less.   In fact, the two most effective means of reducing the birthrate are poverty reduction and female empowerment.

Fortunately, America's TFR has recently dropped to around 1.8, with no indication of rising back above replacement rate in the near term.  But clearly we cannot keep growing and growing, that's for sure (in fact, we need to shrink). And our insatiable addiction to economic growth (despite being decoupled from well-being) is also every bit as harmful as overpopulation as well, if not more so.  Growth for the sake of growth, the ideology of the cancer cell,  is clearly one of the most asinine obsessions our nation (and world) has ever had.  We clearly need to transition to a steady-state economy, most likely following a period of what Naomi Klein calls "selective degrowth" as well.  And to do that, we need a radical paradigm shift to happen yesterday.  Put another way, we need to leave room for Nature, lest Nature not leave room for us.  We have been warned, decades ago in fact.  Unfortunately, such warnings have largely fallen of deaf ears until very recently.

Yesterday is the time to jettison the Twin Big Lies that "everybody must work for a living" and "everybody must procreate".  Because doing so is the sine qua non of any realist plan to avert ecological catastrophe.

Last but not least, the TSAP now believes that as long as men remain in charge, we are all merely rearranging deck chairs on the Titanic.  Let's face it, it ain't gonna be us fellas who will save the world, as the past 7000 years or so have shown.  We paved paradise and put up a parking lot, we created a desert and called it peace.  We devoured and suffocated our own empire, and our proverbial 15 minutes of fame is almost up.  Only when women finally take over and reclaim their rightful position as the new leaders of the free world--and they will--will there be any real permanent solution.

Bottom line: we need to take the environment much more seriously than we do now.  We ignore it at our own peril.  And while the current administration in DC clearly doesn't care, We the People must act nonetheless.  With no apologies to the deniosaurs or Big Oil or Big Gas, or Dirty Coal.

Oh, by the way, wanna hear a joke?  Peak Oil.  Not saying it won't happen, of course--it will eventually peak and decline at some point--but climate change kinda supersedes it.  While conventional oil most likely has already peaked, there is more than enough total oil (including unconventional) to deep-fry the Earth--and most of which needs to stay in the ground if we wish to avoid catastrophic climate change.  Fossil fuels are, after all, what Buckminster Fuller referred to as our planet's "energy savings account", which we need to wean ourselves off of and save just in case of a planetary emergency--and he first said this in 1941!

So quibble all you want, but the truth must be faced head-on.  We have a planet to save.  So let's roll!

When Will This Groundhog Day End?

Today is Groundhog Day.  And every day if the past two agonizing years under Trump have been a different sort of Groundhog Day, much like the movie in which the same day keeps repeating itself. 

Hopefully Mueller is truly in his endgame now, and the Trump regime will be over very soon.  And then America's long, dark night of the soul will finally end.

The Government Shutdown Is Over, But the Damage Is Done

Yesterday, after 35 agonizing days of the partial federal government shutdown that he himself created just to manufacture chaos, Trump finally caved to Pelosi and reopened the government for three weeks with no funding for his border wall.  He made it seem like he won, but it is obvious that he caved, bigly.  Believe me.  And now after alienated most Americans, his caving now alienated his rabid base as well, making him a man without a country now.  Oh, and on the same day, his buddy Roger Stone was indicted in the ongoing Mueller investigation as well.  Things really don't look so good for him now at all.  Sad!

The shutdown may be over, but the damage is done.  And not just to Trump either.  The damage to federal employees, contractors, SNAP beneficiaries, and the overall economy will take a lot longer to recover from, as well as (most ironically of all) the immigration courts whose judges had been furloughed for so long.   Trust in the governments has also sank to a new low as well.  So this is basically a Pyrrhic victory at best for America overall.

In three weeks, Trump may decide to shut down the government yet again if they won't give him his stupid wall, or more likely he will declare a national emergency to try to force the wall to be built and that will backfire bigly on him when challenged in court.  Regardless, he is now running on empty, and the tide has fully turned against him.  (Let's hope he doesn't try to play "chicken" with the debt ceiling next.)

So Donald, do us all a YUUUGE favor and RESIGN, yesterday.  Don't let the door hit you on the way out.  Same goes for Mitch "Awkward Turtle" McConnell and the entire GOP in general. You will NOT be missed.

In other words, as you like to say:  "YOU'RE FIRED!"

Raise The Floor, And Also Trim The Top

It is well known that excessive inequality is very harmful to both the economy and society at large.  Even before we learned the truth about Monetary Sovereignty (MS) and Modern Monetary Theory (MMT) in 2018, the TSAP has long supported both a Universal Basic Income for all, and has also supported hiking taxes on the rich as well.  And even after learning about MS and MMT, we still support hiking taxes on the ultra-rich, and for good reason.

Some may be scratching their heads.  Why do we even need federal taxes at all, if our Monetarily Sovereign federal government has infinite money?  They clearly don't need taxes to pay their bills.  But taxes also have other useful functions as well:

• Taxes compel the use of the official currency, thereby giving it value in the first place.  
• Taxes automatically "claw back" excess liquidity in the money supply due to the "velocity of money", thus to an extent crudely preventing demand-pull inflation before it happens.
• Taxes can be used for social engineering (think vice taxes and Pigouvian taxes) in ways that are otherwise difficult, impossible, illiberal, illegal, and/or unethical to do by other means.
• And finally, progressive taxes can be used to "trim the top" when levied on the top 0.1%, thus reducing inequality without leading to runaway inflation.  Rodger Malcolm Mitchell compares this to a "trophic cascade", such as when wolves (i.e. the federal government) keep elk populations (i.e. the oligarchs) from getting out of control and devouring everything in sight.

So what sort of federal taxes would be suitable for this purpose, knowing what we know now?

• A rich-only, steeply progressive income tax like the kind that prevailed before WWII.  At least the first $100,000 to $500,000 would be exempt, and the new brackets would include marginal rates of 50% above the first $1 million, 70% above the first $10 million, and perhaps 90% above the first $100 million.  With NO LOOPHOLES this time. 
• Tax dividends and capital gains the exact same as ordinary income, but index the basis to inflation for capital gains.
• For the largest corporations, especially those who are "too big to fail", a top tax rate of at least 50%, with NO LOOPHOLES this time.  Tax only retained earnings.  Smaller corporations should not be taxed at all.
• The Universal Exchange Tax, i.e. a tiny tax of 0.1% or less on all electronic transactions.  It would actually be highly progressive in practice since the rich make a disproportionately high amount and number of transactions compared to the non-rich.  "The more you play, the more you pay."
• Various vice taxes (alcohol, tobacco, cannabis, etc.) and Pigouvian taxes (pollution and resource depletion).
• Land value taxes and severance taxes on natural resources such as oil and gas.
• And, of course, the estate tax needs to be made more progressive as well.

State and local governments, of course, are not Monetarily Sovereign, and thus need to raise revenue to pay their bills.  And they can piggyback on the aforementioned federal taxes and levy their own, especially the Universal Exchange Tax and the land value tax and severance taxes, and thus reduce or eliminate their currently regressive sales and property taxes.  Additionally, federal aid to the states should be increased for precisesly the same reason.

A UBI would indeed abolish absolute poverty, no doubt about that.  And that alone would have numerous individual and social benefits.  But without progressive taxation of the top 1% and 0.1%, it would do nothing to reduce relative poverty, and may paradoxically increase inequality.  And inequality in itself is harmful, over and above the effects of poverty.  Thus, it is not enough to either raise the floor or trim the top, we need to do both.  Yesterday.

Thus, Rep. Alexandria Ocasio-Cortez essentially has the right idea as far as taxes go.  And of course, the oligarchs and their sycophantic lackeys are coming down hard on her, but that just goes to show how effective her ideas are in terms of reducing the Gap between the haves and have-nots, which the oligarchs utterly depend on.  All the more reason to do it.

UPDATE:  Elizabeth Warren recently proposed a wealth tax of 2% on the assets of those with a net worth of $50 million and up (that is, on the top 0.1%), and up to 3% above the first billion.  Only the amount over the first $50 million would be taxed.  Controversial as it is, it actually makes a lot of sense, and the TSAP would certainly not oppose it.